Tribunal declares RBS policy unfair

Royal Bank of Scotland was under pressure yesterday to pay staff bonuses for successfully integrating NatWest, which it bought in 2000, after an employment tribunal ruled that the bank had unfairly excluded certain employees from the payouts.

Unifi, the finance union, challenged RBS after the giant Scottish bank refused to pay staff with fixed-term contracts bonuses of on average £1,000 as a thank you for bedding NatWest's business down within its larger rival.

The move caused outrage among staff, largely in the bank's branch network, who had worked on the integration of NatWest.

It also contrasts with the fate of Fred Goodwin, the chief executive of RBS, who received a £1.7m bonus in 2002, which the bank said at the time reflected the successful integration of NatWest.

When RBS bought NatWest it said it would pay all permanent staff a bonus worth 5 per cent of their salary if the business was bedded down by March 2003.

However, European employment law has subsequently changed, forcing companies to give those on short-term contracts the same rights as permanent staff. The employment tribunal ruled that RBS should take into account the legislation, even though it formulated its policy before the law came into force.

The union said it hoped the decision by one employment tribunal would lead to RBS agreeing freely to pay all of its staff in a similar position.

Otherwise, Unifi said, it would fight the policy by taking each case to an employment tribunal. It estimates RBS, which made profits of £6bn last year, would have to find only £100,000 to award bonuses to all the relevant fixed-term workers.

"RBS clearly has the means to settle these cases without delay and should do the right and honourable thing and pay them now," said Clare Moody, a negotiating officer for Unifi.

A spokesman for RBS said: "The arrangements for paying integration bonuses to our staff were put into place before the changes in legislation. As we may take further legal action it would be inappropriate to comment further."

RBS's annual report, released last week, revealed that Mr Goodwin picked up £3.4m for 2003, including a £990,000 bonus.